Creating a business can be a thrilling proposition. The chance to strike out on your own and be the boss has an undeniable appeal. However, there are lots of steps between idea and profit. The smallest misstep can often be the difference between success and failure.
Make sure you give your business the chance to thrive by avoiding these startup mistakes:
1) Starting a business for the wrong reasons
No matter what type of business you plan to form, the fact is that the beginning of the process is going to be a lot of work. Thankless work that likely will not pay for the near future. Don’t start a business as an “easier” way to make money. Businesses are hard work, and you need to have a passion to see them through.
2) Keeping friends as employees
Working alongside your family and friends sounds like a dream. Unfortunately, great friends can make for lousy coworkers. Loyalty can drag down the performance of a business or create unnecessary pressure. There’s no need to disqualify a friend from a position but make sure you are bringing them on because they fit the job, not because you like them.
3) Unclear roles
Similar to number two, having vague roles at the onset of a business can have major implications down the line. People you may have envisioned as employees may start to view themselves as partners. Short-term agreements may be stretched longer than you anticipated. It’s important to have defined roles for everyone in your business.
4) Not enough preparation
When beginning a business, it may feel gloomy to plan for failure. You don’t have to plan to fail, but having a contingency plan in place can help cushion any fallbacks. Having a plan in case things don’t work out the way you hope means your business can weather a setback and learn from it. Failure to prepare for the worst outcome could mean ending a business venture before it ever really begins.
5) Incorrectly structuring your business
A business can be organized in several different ways, each with their own advantages. Choosing the wrong one can have major financial and liability implications. Picking the right structure for your business will help you pursue the goals you’ve set for your company. It will also help you further down the line if you choose to sell or transfer the business to relatives.
There is a lot to take into account when creating a business. These are just a few of the pitfalls that can take down even the best ideas. It’s important to have a strong vision and good execution when starting your business.
If you’re curious about creating your own business, and what it entails, a skilled business attorney can walk you through your options.